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Union Decline and the Coverage Wage Gap in Germany

Author

Listed:
  • Addison, John T.

    (Durham University Business School)

  • Teixeira, Paulino

    (University of Coimbra)

  • Stephani, Jens

    (Institute for Employment Research (IAB), Nuremberg)

  • Bellmann, Lutz

    (Institute for Employment Research (IAB), Nuremberg)

Abstract

Using linked employer-employee data, this paper estimates the effect of collective bargaining coverage on wages over an interval of continuing decline in unionism. Unobserved firm and worker heterogeneity is dealt with using two establishment sub-samples, comprising collective bargaining joiners and never members on the one hand and collective bargaining leavers and always members on the other, each in combination with subsets of worker job stayers. The counterfactuals are then reversed for robustness checks. Joining a sectoral agreement is found always to produce higher wages, while exiting a sectoral agreement no longer produces wage losses if the transition is to a firm agreement. Leaving a firm agreement to non-coverage also leads to wage reductions, while joining one from non-coverage seems decreasingly favourable. The reverse counterfactuals yield correspondingly smaller estimates (in absolute value) of wage development than reported for the initial counterfactuals. Finally, although small, the union wage gap persists.

Suggested Citation

  • Addison, John T. & Teixeira, Paulino & Stephani, Jens & Bellmann, Lutz, 2014. "Union Decline and the Coverage Wage Gap in Germany," IZA Discussion Papers 8257, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8257
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    References listed on IDEAS

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    1. Antonczyk, Dirk & Fitzenberger, Bernd & Sommerfeld, Katrin, 2010. "Rising wage inequality, the decline of collective bargaining, and the gender wage gap," Labour Economics, Elsevier, vol. 17(5), pages 835-847, October.
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    5. John Addison & Paulino Teixeira & Katalin Evers & Lutz Bellmann, 2012. "Is the Erosion Thesis Overblown? Evidence from the Orientation of Uncovered Employers," GEMF Working Papers 2012-07, GEMF, Faculty of Economics, University of Coimbra.
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    Cited by:

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    2. Gabriel Felbermayr & Sybille Lehwald, 2015. "Tarifbindung im Einzelhandel: Trends und Lohneffekte," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(11), pages 33-40, June.

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    More about this item

    Keywords

    Germany; sectoral collective bargaining; firm-level agreements; wages; spell fixed-effects;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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